Published by Maxwell S. Kennerly, Esquire of The Beasley Firm, LLC

Chamber Of Commerce Study: Big Business Says Tort Reform Not Needed

Yesterday, the U.S. Chamber Institute for Legal Reform released its “2012 State Liability Systems Ranking Study,” which asked lawyers and senior executives at companies with over $100 million in annual revenues what they thought about being sued. That’s like asking Yankees fans what they think about the Red Sox.

Seriously, here’s the “Methodology” for the Chamber of Commerce’s “study:”

The final results are based on interviews with a nationally representative sample of 1,125 in-house general counsel, senior litigators or attorneys, and other senior executives who are knowledgeable about litigation matters at public and private companies with annual revenues of at least $100 million.

Does anyone doubt what a bunch of lawyers for big corporations are going to say?

Unsurprisingly, the Chamber of Commerce used these meaningless results from a hopelessly biased survey to spam the Internet with press releases purporting to be tailored to individual states, like this release for California, this release for Pennsylvania, this release for Illinois, this release for West Virginia, and this release for Florida. The highlight of each release was the pro forma quote from Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform, who has apparently served her entire legal career in Washington D.C. as a lobbyist. Here’s her deep and sophisticated understanding of the civil litigation environment in each of those five states:

“Pennsylvania stands geographically between the nation’s worst legal climate in West Virginia and its best in Delaware. Unfortunately, the state is heading more in West Virginia’s direction by allowing plaintiffs’ lawyers to ‘forum shop’ for favorable venues like Philadelphia to cash in,” said Rickard.

“Illinois continues to suffer from the negative reputations of courts in certain counties, like Cook, Madison, McLean, and St. Clair, which still invite lawsuit abuse and produce jackpot jury awards,” Rickard said.

But here’s the incredible part: the hopelessly biased study of corporate lawyers showed that lawyers for big corporations are overwhelmingly satisfied with state courts. More than half said their state court was “excellent” or “pretty good.” A whopping 90% of respondents listed their local jurisdiction as “excellent,” “pretty good” or “fair.” It’s as if you polled a bunch of Yankees fans and 90% said the Red Sox were an excellent, pretty good, or fair team.

When asked to come up with the “most important issues for state policymakers,” the respondents struggled to come up with issues to complain about. In the end, the most common complaint — at a mere 5% of respondents — was to impose more limits on discovery. For all the hoopla about “frivolous lawsuits,” only 4% of respondents could even think to mention that. That finding lines up with the finding of another study The Pop Tort pointed out, in which a survey of businesses found that “Cost and Frequency of Lawsuits/Threatened Lawsuits” was the sixty-fifth highest priority for businesses, just below “Solid and Hazardous Waste Disposal.” [Update: A commentator notes, correctly, that this study was more focused on small businesses and that “cost of liability insurance” ranked higher. More discussion on that in the comments.]

As I’ve said over and over again on this blog “Tort Reform” is by and large a sham, a fake issue created by a handful of highly vested interests like insurance, pharmaceutical, automotive, and consumer product companies. There is no epidemic of “frivolous lawsuits,” no secret economy of lawyers making millions of dollars just for filing lawsuits. There’s just a civil justice system in which the majority of preventable injuries go unaddressed, a system where every deck is stacked against the plaintiffs.

The Chamber of Commerce and other “tort reform” supporters don’t want to reduce “frivolous” lawsuits; they want to eliminate as many lawsuits as they can, including meritorious ones. Consider their #1 state, Delaware: that’s where, in Dambro v. Meyer, 974 A.2d 121 (Del. 2009), the Delaware Supreme Court held that a patient whose breast cancer went undiagnosed for more than year nonetheless “knew,” or through “the exercise of reasonable diligence” could have known, that she was the victim of malpractice back when the misdiagnosis occurred, and so was required to sue her radiologist within two years of the negligent mammogram reading rather than within two years of learning of the cancer or the possibility of malpractice. Thus, her lawsuit was dismissed before discovery, before summary judgment, before a jury trial, without judge or jury even considering if the doctor actually committed malpractice.

It’s no surprise the Institute for Legal Reform hopelessly misrepresented the results of their own study, and no surprise they took aim at their long-standing target, Philadelphia County. This time they claim Philadelphia “has come to exemplify some of the worst excesses of today’s American civil justice system,” in support of which they cite, well, nothing. Their own study showed that, on everything from damages to impartiality, more than half of respondents said that Pennsylvania was excellent, pretty good, or fair. Again, remember that the survey respondents here aren’t impartial: their job is to protect these large corporations from being held accountable for the damage they cause.

But the Chamber of Commerce (and its Institute for Legal Reform) is a lobbying group. We expect this sort of truthiness from them. Far more disappointing is the reaction of the major media. Capitol Ideas at The Morning Call failed to say what the study actually surveyed, failed to report the actual findings — that big business’ lawyers think our civil litigation system is fine — and then uncritically parroted the arguments of the Hospital and Healthcare Association of Pennsylvania, which lobbies to eliminate patients’ legal rights, without any response from patients’ advocates. CBS 3 only briefly described the source of the study, failed to report the study’s actual findings, and failed to report any opposing views. The Philadelphia Inquirer got the closest to a fair report, noting the nature of the survey and its proponents, and including a response from the Pennsylvania Association for Justice, but it, too, didn’t catch the study’s actual positive findings.

Which brings us back to the real question: it’s no surprise the largest corporations are fighting every day to deny injured consumers the right to even bring lawsuits. The question is why the media keeps parroting this propaganda? Next time the Chamber of Commerce spams the Internet, don’t give them a platform, treat them like any other spam.

Your quotation of the National Federal of Independent Businesses (NFIB) study saying that lawsuits are the 65th most important thing to businesses is misleading.

That study regarded the concerns of small businesses, who are unlikely to have the financial means to pay out big dollars on a lawsuit (they don’t have extensive insurance or the cash). This issue was actually highlighted by the NFIB. Small Business Problems and Priorities, at 19 (“Since plaintiffs prefer ‘deep pocket’ defendants, it is also possible owners of some of the smallest firms do not worry because they are not worth suing.”). In fact, only 11% of the respondents of the NFIB had actually been sued in a lawsuit, and for those that had been, this issue rated much higher than the 65th most important thing on their agenda. That factor, alone, explains why the issue ranks so low for most small business owners.

Also, two of the top ten concerns on the NFIB study (workers’ compensation costs and unreasonable government regulation) are costs that are either the direct result of tort law or are closely related to it. Another related issue, the cost of liability insurance, was the second highest concern for small business owners in 2004 (falling to the 13th highest concern in 2008). The cost of outside business services (including lawyers) made the top 25 concerns.

So, a fairer statement about the NFIB study is that most small business owners are never sued, but for those who are, lawsuits are a top priority.

http://www.litigationandtrial.com/ Max Kennerly

You’re right about the “cost and availability of liability insurance” being on the list, at #13, but it’s important you consider that in tandem with “cost and frequency of law suits / threatened lawsuits” at #65. The huge disparity between two items that at first blush should be mostly overlapping demonstrates what trial lawyers have been saying for years: insurance companies are immensely profitable, and have been gouging policyholders on the premiums for years, even while judgments enforced beyond policy limits are exceedingly rare. Even small business owners recognize that, hence worrying about liability insurance prices but not about lawsuits themselves.
I have no idea where you get the conclusion “that most small business owners are never sued, but for those who are, lawsuits are a top priority.” The first part of that statement is supported by the data, but the second is not. Arying to lump tort liability into “outside business services” makes no sense at all. Go to your local grocer or mechanic and ask them what their “outside business service” is, and they’ll talk about advertising and accounting and tax preparation, not litigation counsel. Similarly, it’s a stretch to say that either workers compensation or government regulation are at all related to tort reform, the primary object of the Chamber’s lobbying, because “tort reform” rarely includes any proposals related to either, it just includes limits on damages, on venue, on theories of liability, etc.
But the real kicker here is your astute and correct observation that the NFIB survey was focused on small businesses. The argument made by tort reformers over and over again, like with their new “faces of lawsuit abuse” propaganda campaign, is that small businesses are injured and closed as result of “frivolous lawsuits.” Is more than a little revealing that, when the Chamber of Commerce look to drum up survey results about the impact of lawsuits, they specifically excluded all small and medium-sized businesses, instead focusing on those with $100 million or more in annual revenue. What more evidence do you need that the “faces of lawsuit abuse” campaign is a sham than to see that the Chamber of Commerce doesn’t even want to know what those “abused” businesses actually think about civil litigation?

gts109

Thanks for the update in your article.

You asked me where I get the idea that lawsuits are a problem for those sued. It was from the NFIB study at 18-19: “It is possible that for the 11 percent of owners who have been defendants in lawsuits during the past five years (NFIB’s The Use of Lawyers poll), this problem area evokes a strong response. For the majority of owners who have not been sued, the opposite response applies.” Also, I don’t think it’s a stretch to say that people care most about their own problems, regardless of what the NFIB says.

As for the Chamber of Commerce, its constituency is business; it’s a business lobby! Of course, they asked businessman what they think about courts. That’s their job, their raison d’etre!!! So, yeah, they have a point of view. I think everyone knows that. (I do like your criticism of journalists as a group of lazy copiers of press releases, though.)

The survey is certainly “biased” in that it only looks at corporate entities of a certain size. If, however, one hundred million dollar companies (big certainly, but there are scads of such entities in America) are getting sued the most (which makes sense to me), asking them about how they feel about the court system is sensible. Plus, these companies sue each other a lot, so most general counsel will have some experience being the plaintiff in some kind of action. In sum, I think it’s reasonable to ask frequent parties to lawsuits what they think about the court system.

As for the results of the survey, when I look at them, they seem accurate (as someone familiar with state court tort litigation). Illinois, California, and a few of the southern states are generally lousy places to get sued if you’re a big company. That’s what the survey reflects. Take it with a few grains of salt, if you want to be “objective” (neither of us are in this fight), but do you really disagree that Madison County, Illinois is a bad place to be sued if you’re a defendant in a class action or an asbestos case?

Anyway, if you want to ask tort claimants or their attorneys about how they rate the court system, go ahead. Nobody is stopping you or the plaintiffs’ bar. You could create the American Constitution Society to the Federalist Society for this judicial system rankings game.

http://www.litigationandtrial.com/ Max Kennerly

Your final idea is what bothers me about the media attention here. If the American Association for Justice conducted a poll of lawyers who have recovered more than $1 million for injured plaintiffs about state courts, they would probably find strikingly similar overall national numbers, but the order in which the states were listed would be reversed. In the end result would be… So what? What relevance does it have to national policy that lawyers for big businesses don’t like lawsuits while lawyers for injured people think that lawsuits are important?
The debate over tort policies these days has been so abused and debased by the insurance industry that a large portion of the public believes frivolous lawsuits are both commonplace and extremely lucrative, and so our debate over these important issues takes place in a warped and misleading context, like if all of our foreign-policy debates revolved around guarding against the Canadian menace. The end result is that tort policy often makes no sense at all, like how strict limitations on compensatory damages are tossed around as a means of preventing frivolous lawsuits, something that is on its face ridiculous to both plaintiffs and defendants lawyers.

Young attorney

Saw your post this morning thought I’d share this story……. I was recently watching a game at a house of a friend, my friends are between 30-40 years older than I am. As an aspiring young attorney, I fielded a lot of questions that night, eventually tort reform was mentioned. As I was asked various questions about “bloated awards” “frivolous lawsuits” etc someone mentioned the chamber of commerce as a source for the idea that plaintiff’s lawyers are hurting america. I asked them to tell me what the Chamber of Commerce exists to promote, they all responded with a variation of an association with government and government interests. When I told them the chamber of commerce is a business network, shock appeared across their faces. I have no doubt that this study will make it’s way in to the popular lexicon of the anti-lawyer/ anti-tort -minded and unfortunately, the erosion of the seventh amendment will continue.

http://www.litigationandtrial.com/ Max Kennerly

That’s a common misconception, one that the Chamber of Commerce tries to promote with a fake government-looking seal, fake government-sounding titles, and references to supposedly neutral related entities like their “Institute.”
The reality is not just worse than most people know, but worse than even most business people know. There’s a reason the Chamber of Commerce limited the survey to businesses with $100 million in revenue or more: those are the only businesses they care about. A couple years ago the Washington Monthly magazine had a detailed exposé about this, and of course nothing changed, and no other media outlet learned not to trust the Chamber of Commerce.

I’m a trial lawyer for injured people and businesses at The Beasley Firm, founded in 1958. The Firm’s legacy speaks for itself; the law school at Temple University was re-named the Beasley School of Law in honor of the Firm’s founder, James E. Beasley. We’re listed in [...]